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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Valley Hospital Association, Inc. v. Brauneis (08/18/2006) sp-6036
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| VALLEY HOSPITAL | ) |
| ASSOCIATION, INC., | ) Supreme Court No. S- 11902 |
| ) | |
| Appellant, | ) Superior Court No. 3AN-04-8900 CI |
| ) | |
| v. | ) O P I N I O N |
| ) | |
| DEREK LEE BRAUNEIS, | ) No. 6036 - August 18, 2006 |
| ) | |
| Appellee. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, William F. Morse, Judge.
Appearances: Peter J. Aschenbrenner,
Aschenbrenner Law Offices, Inc., Fairbanks,
for Appellant. No appearance by Appellee.
Before: Bryner, Chief Justice, Matthews,
Eastaugh, Fabe, and Carpeneti, Justices.
EASTAUGH, Justice.
I. INTRODUCTION
Valley Hospital Association appeals some of the terms
of a default judgment it obtained against Derek Lee Brauneis.
Although the superior court entered a default judgment against
Brauneis at Valley Hospitals request, it refused to grant Valley
Hospital the right to enforce a health care provider lien against
Brauneis, ruling that Valley Hospital failed to present evidence
that it had complied with a statutory requirement that the lien
be recorded. The superior court also refused to award attorneys
fees to Valley Hospital. Valley Hospital argues that it was an
abuse of discretion to enter those rulings. We remand because
Valley Hospital was not given an opportunity to present evidence
that it had recorded the lien. Although the attorneys fees
ruling is unexceptional, the remand on the lien issue requires
that the fees ruling be vacated.
II. FACTS AND PROCEEDINGS
Valley Hospital Association filed suit against Derek
Lee Brauneis in July 2003, alleging that it treated him for
injuries he suffered in a motor vehicle accident. Its complaint
alleged that the cost of treatment was $18,750.43, of which
Brauneis paid $50. It also alleged that Valley Hospital recorded
a health care provider lien against Brauneis on July 25, 2003.
The complaint specified the instrument number assigned to the
lien by the recorder: 2003-020852-0.
Valley Hospitals complaint sought a personal judgment
against Brauneis for $18,700.43 plus prejudgment interest and a
judgment foreclosing Valley Hospitals health care provider lien.
Brauneis did not appear in the lawsuit and the clerk entered
default against him.
The superior court then entered default judgment for
Valley Hospital against Brauneis, but modified Valley Hospitals
proposed judgment in two respects. First, the court crossed out
language that would have awarded the hospital Alaska Civil Rule
82 attorneys fees of $2,038.47. The court, in a handwritten
note, explained that attorneys fees were [d]eleted because not in
compliance with Civil Rule 82(b)(4). Second, the court crossed
out a paragraph that would have entitled Valley Hospital to
foreclose its lien against Brauneis. The courts interlineated
note explained that [t]here is no evidence that the lien was
recorded as required by AS 34.35.460.
Valley Hospital moved for reconsideration and
submitted, for the first time, evidence that it had recorded the
lien in compliance with AS 34.35.460. It also submitted a new
proposed default judgment that reduced the proposed attorneys
fees award to $1,500 plus costs. The superior court denied the
motion for reconsideration. Valley Hospital appeals. Brauneis
has not entered an appearance on appeal.
III. DISCUSSION
A. Valley Hospital Should Have Been Given an Opportunity
To Present Evidence that It Recorded the Lien.
The superior court, in modifying the proposed default
judgment, apparently reasoned that Valley Hospital was obliged to
present evidence that it had perfected its lien against Brauneis
in the manner required by AS 34.35.460.1 We conclude that a
party seeking a default judgment is under no such obligation
unless the trial court notifies the party otherwise and provides
the party with an opportunity to present evidence that it
complied with the statute.
Default judgments are governed by Alaska Civil Rule 55.
When a plaintiff applies for entry of a default judgment under
Rule 55(c), the trial court must exercise its discretion in
determining whether to enter judgment.2 Although a party has no
absolute right to a default judgment following entry of a
technical default, the court may not arbitrarily deny entry of a
judgment against the defaulting party.3 We review a trial courts
refusal to enter default under the abuse of discretion standard.4
Generally speaking, [i]f the court determines that
defendant is in default, the factual allegations of the
complaint, except those relating to the amount of damages, will
be taken as true.5 But Alaska Civil Rule 55(c)(1) states:
[I]f, in order to enable the court to enter
judgment or to carry it into effect, it is
necessary to take an account or to determine
the amount of damages or to establish the
truth of any averment by evidence or to make
an investigation of any other matter, the
court may conduct such hearings or order such
references as it deems necessary and proper.
(Emphasis added.) We have held that the quoted portion of Rule
55(c)(1) allows the trial court to question a defendants
liability after a default has been entered against him.6
Therefore,
[i]f the court determines that in order to
enter the judgment it is necessary for the
plaintiff to present evidence supporting one
or more of the plaintiffs allegations and if
the plaintiff is unable to adduce any
evidence tending to support the questioned
allegations, then a judgment should be
entered dismissing the plaintiffs
complaint.[7]
Plaintiffs do not have to prove questioned allegations by a
preponderance of the evidence. Rather, they need only submit
enough evidence to put the questioned allegation in controversy.
If faced with conflicting but legitimate evidence on both sides,
the court is bound to enter judgment for the party in whose favor
the default has been entered.8
Courts considering the issue have held that the trial
court may not consider whether the factual averments in the
complaint are supported by evidence unless the plaintiff is given
notice and an opportunity to produce the evidence. In
Quirindongo Pacheco v. Rolon Morales, the United States District
Court denied the plaintiffs motion for default judgment because
the plaintiff failed to produce evidence supporting his complaint
at a hearing ordered under Federal Civil Rule 55(b)(2).9 On
appeal, the United States Court of Appeals for the First Circuit
remanded, holding that a trial court may investigate the truth of
averments in the complaint only if the court has made its
requirements known in advance to the plaintiff, so that [he]
could understand the direction of the proceeding and marshal such
evidence as might be available. 10 The Seventh Circuit has
adopted this rule as well.11 We agree with these courts that a
trial court may not deny a motion for entry of a default judgment
for lack of proof of an averment in the complaint without first
providing the plaintiff with notice and an opportunity to submit
evidence of the averments truth.
Valley Hospital alleged in its complaint that it
recorded the lien on July 25, 2003. It also alleged that the
lien complies with AS 34.35.450482 and is enforceable. The
superior court was obligated to either accept the facts contained
in these averments or order the plaintiff to submit supporting
evidence.12 Valley Hospital was never given an opportunity to
submit such evidence. It was therefore an abuse of discretion
to limit the proposed default judgment for lack of evidence that
the lien had been recorded.
It could be argued that it is not necessary to require
Valley Hospital to submit proof of the recording at all, given
the specificity and facial plausibility of the complaints
averment that the lien had been recorded and the lack of any
evidence casting doubt on its veracity.13 We have held that a
default establishes the well pleaded allegations of the complaint
unless they are incapable of proof or are contrary to facts
judicially noticed or to uncontroverted evidence presented by the
parties.14 In any event, on remand, Valley Hospital should be
given an opportunity to present evidence that it complied with
the statute.
B. The Superior Court Did Not Abuse Its Discretion by
Denying Attorneys Fees to Valley Hospital.
We ordinarily review awards of attorneys fees for an
abuse of discretion, but we review underlying legal
determinations using our independent judgment.15 We will affirm a
denial of attorneys fees to the prevailing party as long as the
denial is not arbitrary or capricious or for some improper
motive. 16
The superior court refused to grant Valley Hospitals
request for attorneys fees, explaining that Valley Hospital was
not in compliance with Alaska Civil Rule 82(b)(4). Rule 82(b)(4)
states in part that, [u]pon entry of judgment by default, the
plaintiff may recover an award calculated under subparagraph
(b)(1) or its reasonable actual fees which were necessarily
incurred, whichever is less. Valley Hospital asked for a fee
award of $2,038.47, an amount that was apparently based on the
schedule in subparagraph (b)(1) (ten percent of the judgment of
$20,384).
Although the superior court did not provide a detailed
explanation for its denial of attorneys fees, denial was
warranted by Valley Hospitals failure to document its actual
fees. In Moses v. McGarvey, we held that when counsel requests
attorneys fees other than based on the schedule . . ., accurate
records of the hours expended and a brief description of the
services reflected by those hours should be submitted.17
Furthermore, Rule 82(c) requires that a motion for attorneys fees
in a default case must specify actual fees. Documentation of
actual fees is necessary in a default case because Rule 82(b)(4)
requires the court to award the lesser of actual reasonable fees
or the scheduled amount under Rule 82(b)(1).18 Particularly in a
simple default case such as this, in which little substantive
legal work was necessary, reasonable, actual fees may be far less
than the scheduled amount under Rule 82(b)(1). An itemization of
work performed and an affidavit certifying its veracity are
essential for determining whether fees based on the Rule 82(b)(1)
schedule are proper.19
Valley Hospital requested fees that were seemingly
based on the schedule in Rule 82(b)(1). It did not specify or
document its actual fees. From the small number and simple
nature of the legal documents filed in this case, the superior
court could have properly inferred that Valley Hospitals
reasonable actual fees should have been far less than the amount
called for by the Rule 82(b)(1) schedule. But Valley Hospital
provided the court with no means by which it could determine
actual fees. Valley Hospitals motion for reconsideration
contained an unsworn and unsubstantiated representation that
$1,500 reflects less than the actual work done in preparing the
case for filing and obtaining the default judgment, but this
representation was insufficient to allow the superior court to
properly review the fee request.20
In addition, once the fee award was struck from the
proposed default judgment order, Valley Hospital did not move for
attorneys fees. Rather than move for reconsideration, Valley
Hospital should have followed the procedure set out in Alaska
Civil Rule 82(c) and filed a motion for an award of fees. Rule
82(c) states that:
A motion is required for an award of
attorneys fees under this rule or pursuant to
contract, statute, regulation, or law. The
motion must be filed within 10 days after the
date shown in the clerks certificate of
distribution on the judgment as defined by
Civil Rule 58.1. Failure to move for
attorneys fees within 10 days, or such
additional time as the court may allow, shall
be construed as a waiver of the partys right
to recover attorneys fees. A motion for
attorneys fees in a default case must specify
actual fees.
By failing to file a properly supported motion for attorneys fees
after the default judgment was entered, Valley Hospital waived
its right to recover attorneys fees.
Valley Hospital argues that Rule 82(b)(4) does not
apply to cases involving lien foreclosures. It argues that full
reasonable attorneys fees should always be awarded in such cases,
even if Rule 82(b)(1) dictates a smaller award. It cites AS
34.35.005(b), which provides that the court should allow for a
reasonable attorney fee in lien enforcement actions generally,21
and AS 34.35.480, which provides that the court shall allow a
reasonable attorney fee upon entering a decree for the plaintiff
in health care provider lien enforcement actions.22
Valley Hospital is correct that AS 34.35.480 governs
the award of attorneys fees in cases involving the enforcement of
liens. Alaska Civil Rule 82(a) provides that attorneys fees are
calculated under Rule 82 [e]xcept as otherwise provided by law or
agreed to by the parties. In Boyd v. Rosson we held that under
AS 34.35.005(b) full [attorneys] fees should be awarded to
successful lien claimants so long as the fees are reasonable.23
We assume for the sake of discussion that the same interpretation
applies to AS 34.35.480.
But in this case, the superior court did not enter a
decree for the plaintiff on the lien issue.24 It was not error,
therefore, for the court to analyze Valley Hospitals request for
attorneys fees under Rule 82.25 More importantly, even if AS
34.35.480 had applied here, the superior court would have been
justified in denying the request because Valley Hospital failed
to file a properly supported Rule 82(c) motion.26
Because we are remanding on the lien issue, Valley
Hospital will likely have a second chance to file a Rule 82(c)
motion for attorneys fees under either Rule 82(b)(4) or AS
34.35.480. In order to prevail on any new motion, Valley
Hospital must adequately document its actual fees. Failure to do
so may again result in the denial of any fee award.
IV. CONCLUSION
It was error to fail to give Valley Hospital an
opportunity to submit evidence that it recorded the lien as the
complaint alleged. We therefore REMAND for further proceedings
in accordance with this opinion. Although under the circumstances
it was not error to deny attorneys fees to Valley Hospital, the
remand on the lien claim requires us to VACATE the fees award.
_______________________________
1 AS 34.35.460 provides that, in order to perfect a
health care provider lien, the health care provider
shall, not later than 90 days after the date
of injury, or in no event later than 90 days
after the discharge of the injured person
from the hospital or the provision of the
physicians services, file a notice of lien
substantially in the form prescribed in AS
34.35.465, containing a general description
of the services rendered and a statement of
the amount claimed, with a recorders office,
and shall, after the 90-day period, before
the date of judgment, settlement or
compromise, serve a copy of the notice of
lien by registered mail, at the last known
address, upon the person alleged to be
responsible for causing the injury and from
whom damages are claimed, and upon the
insurance carrier that has insured against
the liability, if the insurance carrier is
known.
Valley Hospitals notice, submitted to the court with its motion
for reconsideration, does not include all the language specified
in AS 34.35.465. The notice omits the words . . . and the
__________ (claimant) hereby claims a lien upon any money due or
owing or any claim for . . . . This omission renders the first
sentence of the notice nonsensical and appears to be a scriveners
error. But the superior court gave no indication that it denied
the motion for reconsideration on the basis of this omission and
we express no opinion whether the notice as written therefore
failed to satisfy AS 34.35.460.
2 Peter Pan Seafoods, Inc. v. Stepanoff, 650 P.2d 375,
378 (Alaska 1982).
3 Id.
4 Id.
5 10A Charles Alan Wright et al., Federal Practice and
Procedure 2688 (3d ed. 1998) (citing numerous federal cases
interpreting nearly identical federal rule); see also Danning v.
Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978) (interpreting federal
rule); Syndoulos Lutheran Church v. A.R.C. Indus., Inc., 662 P.2d
109, 112(Alaska 1983) (interpreting Alaska rule).
6 Syndoulos Lutheran Church, 662 P.2d at 112.
7 Id.; see also Wright et al., supra note 5, at 2688
([T]he court, in its discretion, may require some proof of the
facts that must be established in order to determine liability.).
8 Syndoulos Lutheran Church, 662 P.2d at 112 (quoting In
re West Sec. Litig., 436 F. Supp. 1281, 1286 (N.D. Cal. 1977)).
9 Quirindongo Pacheco v. Rolon Morales, 953 F.2d 15, 16
(1st Cir. 1992). Like Alaska Civil Rule 55(c)(1), Federal Civil
Rule 55(b)(2) allows the court to conduct such hearings or order
such references as it deems necessary and proper to establish the
truth of any averment by evidence if necessary to enable the
court to enter judgment or carry it into effect.
10 Quirindongo Pacheco, 953 F.2d at 16 (alteration in
original) (quoting McGinty v. Berenger Volkswagen, Inc., 633 F.2d
226, 229 (1st Cir. 1980)).
11 Black v. Lane, 22 F.3d 1395, 1398 (7th Cir. 1994)
(citing Quirindongo Pacheco).
12 The superior court was not obligated to accept the
conclusions of law underlying Valley Hospitals allegation that
the lien was enforceable. [A] party in default does not admit
mere conclusions of law. Wright et al., supra note 5, at 2688;
see also Harrison v. Bailey, 107 F.3d 870, 870 (6th Cir. 1997).
Had Valley Hospital failed to state a valid legal claim, the
superior court would have been obligated to dismiss the complaint
even though the defendant was in default. But in this case, the
order makes it clear that the court was concerned with the lack
of evidence supporting the complaints factual allegations, not
its legal conclusions.
13 See Alaska R. Civ. P. 55(c)(1).
14 Syndoulos Lutheran Church, 662 P.2d at 112.
15 Dawson v. Temanson, 107 P.3d 892, 894 (Alaska 2005).
16 Bowers Office Prods., Inc. v. Fairbanks N. Star Borough
Sch. Dist., 918 P.2d 1012, 1016 (Alaska 1996) (quoting Cooper v.
Carlson, 511 P.2d 1305, 1310 (Alaska 1973)).
17 Moses v. McGarvey, 614 P.2d 1363, 1374 n.32 (Alaska
1980); see also Alaska R. Civ. P. 77(i) (permitting courts to
hear motions based on facts not appearing of record on affidavits
or other documentary evidence).
18 See Alaska R. Civ. P. 82(b)(4).
19 See Moses, 614 P.2d at 1374 n.32; see also Matanuska
Elec. Assn v. Rewire the Bd., 36 P.3d 685, 698 (Alaska 2001)
(holding that itemization of work performed accompanied by
counsels affidavit adequately documented partys attorneys fee
request).
20 See Alaska R. Civ. P. 77(i).
21 AS 34.35.005(b) states that [i]n an action to enforce a
lien, the court shall allow as part of the costs all money paid
for drawing the lien and for filing and recording the lien claim,
and a reasonable attorney fee for the foreclosure of the lien.
22 AS 34.35.480(b) states that [i]n [an action under AS
34.35.450.480] upon entering a decree for the plaintiff, the
court shall allow as part of the costs, all money paid for the
filing and recording of the lien notice, together with a
reasonable attorney fee.
23 Boyd v. Rosson, 713 P.2d 800, 801 (Alaska 1986),
modified on rehg, 727 P.2d 765 (Alaska 1986).
24 See AS 34.35.480(b).
25 We also note that Valley Hospital did not seek
attorneys fees under AS 34.35.480 from the superior court until
its request for Rule 82 attorneys fees was rejected by the
superior court.
26 Alaska Civil Rule 82(c) on its face applies to fee
awards pursuant to contract, statute, regulation, or law as well
as to fee awards under Rule 82(b).
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